A UL policy may have more options than whole-life or term coverage. It would be best if you managed the policy. With variable UL, you will need to decide how much premiums you are willing to pay. These variables and insurance costs that rise over time can impact your cash value. It would help if you also kept an eye on the value balance. If it drops to zero, premiums may go up, or your policy could be canceled.
The policy's cash value grows tax-deferred so that no taxes are due on interest or earnings. Beneficiaries also receive the death benefit income-tax-free.
Universal life insurance is a type permanent insurance. Universal life insurance covers an insured person for the entire duration of their lives, as long as they pay the premiums and meet any other requirements. Universal life insurance is similar to permanent life policies. It combines a savings element (called "cash worth") with lifetime protection. Your beneficiaries receive the death benefit of your policy when you die.
The policy's cash value is tax-deferred and grows over time, so there are no taxes due on any current earnings or interest. The death benefit is also income-tax-free for beneficiaries.
In general, guaranteed universal life is considered to be the least risky. Variable universal lives, however, have the highest chance of success because their cash value is tied directly to stocks and bonds. Variable universal life and indexed universal life can help you build more wealth than guaranteed universal.
Universal life offers flexibility to purchase a permanent policy for life and build cash value. Flexible premiums allow you to adjust your payments and raise or lower them within the limits of the insurance company. This insurance can be used to protect people with variable incomes, as the cash value gives them the ability to make withdrawals or take out loans.
The policy's cash values grow tax-deferred. This means that current earnings and interest are exempt from taxes. Beneficiaries receive the death benefit without income tax.